United States: PA Supreme Court Grants Petitions For Allowance Of Appeal In Connection With Planned Residential Developments (PRDs)

In Newtown Square East, L.P. v. Township of Newtown, 2014 WL 4745695, the Pennsylvania Supreme Court granted petitions for allowance of appeal to determine the specificity with which a developer must identify a proposed use of a structure within a tentative plan for a Planned Residential Development (PRD). In the case, the court discusses whether the Township of Newtown's PRD ordinance meets the criteria of Pennsylvania's Municipalities Planning Code (MPC), and whether the tentative plan at issue met the requirements of the ordinance. Justice McCaffery authored the majority opinion and was joined by Chief Justice Castille, Justice Baer and Justice Stevens.

By way of background, a PRD is a flexible zoning arrangement where a single area of land can be developed for multiple uses (often a combination of residential and nonresidential) that do not correspond to the zoning restrictions and regulations established in any one zoning district. In Pennsylvania, Article VII of the MPC provides the parameters within which a municipality sets forth the standards, conditions and regulations for a PRD. A developer must submit an application for tentative approval of a PRD, which must provide the information "reasonably necessary to disclose to the governing body or planning agency . . . the density of land use to be allocated to parts of the site to be developed . . . [and] the use and approximate height, bulk and location of buildings and other structures." 53. P.S. § 10707 (2014). A public hearing on the tentative plan must occur within 60 days of the application's submission. If an application for final approval complies with the tentative plan previously approved, a new public hearing is not required; however, if there are variations between the plan submitted for final approval and the plan granted tentative approval, the governing body may refuse to grant final approval on those grounds.

Facts and Procedural History

In July 2009, the Newtown Township Board of Supervisors (Township Board) enacted a PRD ordinance pursuant to Article VII of the MPC. BPG Real Estate Investors submitted a tentative plan proposing a multi-use development of a 218-acre tract of land. The plan identified the proposed buildings and specified the maximum square footage that would be devoted to residential units, office space, hotel space and "commercial/retail/restaurant" space. The Township Board approved the tentative plan. Newtown Square East, L.P. (NSE), the owner of property adjacent to the tract, filed a challenge to the validity of the PRD ordinance with the Newtown Township Zoning Hearing Board (Zoning Board), arguing that the tentative plan failed to sufficiently identify the specific uses of buildings and structures included within the plan. The Zoning Board upheld the validity of the PRD ordinance, and NSE appealed the decision to the Court of Common Pleas. NSE also filed an appeal of the Township Board's approval of BPG's tentative plan with the Court of Common Pleas. 

The Court of Common Pleas agreed with the Zoning Board, holding that the PRD ordinance had only "minor textual differences" from the requirements of Article VII and did not exceed the scope of authority granted by the MPC. In addition, the court affirmed the Township Board's approval of the tentative plan, holding that the plan was consistent with the requirements of the PRD ordinance. NSE appealed both decisions to the Pennsylvania Commonwealth Court (Commonwealth Court).

On appeal, NSE again argued that the PRD ordinance is inconsistent with the MPC because it does not require a developer to identify the specific use of the buildings and proposed structures in the plan. In rejecting NSE's claim, the court found that the stated purpose of Article VII of the MPC was to provide flexibility in the PRD approval process. By definition, a PRD permits broad categories of use for the purpose of determining whether a tentative plan satisfies desired ratios of residential to non-residential uses. Because the MPC requires no more than a categorical identification of proposed use, the court found NSE's argument unconvincing. The Commonwealth Court also rejected NSE's assertion that the lack of a public hearing at the final approval stage denied NSE due process. The court stated that there was "no substantive difference" between the PRD ordinance and the process afforded by the MPC; both permit variations between the tentative plan and the final plan, and both permit local authorities to assess whether these variations justify denying a final plan. Finally, the Commonwealth Court held that BPG's tentative plan was properly approved under the PRD ordinance. The tentative plan appropriately identified the location and category of proposed use for each structure contained within the plan, and the use-designations were consistent with the requirements of the PRD ordinance and the MPC. Therefore, the Township Board properly approved the tentative plan. NSE appealed the decisions of the Commonwealth Court.

Supreme Court of Pennsylvania Decision

The Pennsylvania Supreme Court agreed with the Commonwealth Court that the tentative plan's categorical use-designations were sufficient under the MPC and the PRD ordinance. The court held that, contrary to NSE's position, a developer is not required to designate a single category of permitted use for each building at the tentative plan stage. Indicating several possible uses for a proposed building is consistent with the PRD ordinance and the MPC. 

The Supreme Court also rejected NSE's argument that the ability to modify proposed uses between tentative and final approval infringed on the due process rights of neighboring landowners. NSE argued that the lack of public hearing with respect to the proposed variations undermined due process guarantees that are inherent in the MPC. The court rejected this argument and agreed with the Commonwealth Court. It found that in creating the PRD, the General Assembly intended to grant discretion to local authorities to determine which variations between a tentative and final plan were significant enough to warrant a refusal to grant approval of the final plan. Under NSE's interpretation, a new public hearing would be required each time a developer sought a change to its tentative plan, which is inconsistent with the letter and spirit of the MPC. The court held that the PRD ordinance is consistent with, and "reflects the flexibility inherent in," the MPC.     

Accordingly, the Supreme Court of Pennsylvania affirmed the decision of the Commonwealth Court. 

Justice Eakin's Dissent

In a dissenting opinion joined by Justice Saylor and Justice Todd, Justice Eakin disagreed that the tentative plan submitted by BPG was sufficiently specific, and found that the plan contained improper use-designations that precluded informed public comment and governmental consideration. Justice Eakin agreed that the PRD ordinance was consistent with the MPC and conceded that the MPC encourages, and requires flexibility in, the approval process. But according to Justice Eakin, that flexibility does not excuse a developer from classifying a proposed use and its location within the plan. Merely identifying a building or space as "commercial" or "non-residential" does not allow the governing body to understand what it is approving, or the public to ascertain whether it has any objections. Justice Eakin notes, "Flexibility does not equate to 'obfuscation by generality,'" and, in his view, the tentative plan contained insufficient information to allow an informed approval or sufficient public discourse.  

Justice Eakin stressed that his interpretation is necessary based on how the relevant MPC provisions are constructed. If an application for final approval has been properly filed and meets the specifications of the written communication of tentative approval, the MPC indicates that the municipality shall grant the application. See §10711(b). It is only when there are variations between the tentative and final plan that the municipality may refuse to grant final approval. See §10711(c). To Justice Eakin, these provisions illustrate the problem with allowing multi-use designations at the tentative-plan stage. A developer could make unfettered changes to the tentative plan and remain within the parameters of the MPC so long as the tentative plan was sufficiently vague. Accordingly, Justice Eakin dissented.

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